Blowing Hot Air – Balloon Ride Fraud in California

This story has been in the works for a while, and came to our attention just the other day when  daily Deal Media received an email from Denni Barrett of Magical Adventure Balloon Rides, a southern California hot air adventure company.

It involves a half-off deal on Travelzoo and other major daily deal sites, for a 1-hour hot air balloon ride over Temecula, California, courtesy of SoCal Hot Air Balloon Tours. The trip was supposed to be a relaxing ride above the Temecula wine country, with complimentary champagne, but when purchasers started to redeem the vouchers, things got hairy.

The story was covered by channel 7 Eyewitness News in Temecula, and features John Francis, who purchased 4 vouchers for the hot-air balloon ride with SoCal. Not only did have severe problems trying to schedule the trip, but found out that a little over a year after the deal was offered, SoCal went out of business.

SoCal sold over 4,000 tickets through Travelzoo, and over 2,000 through at least 6 other deal sites. The Eyewitness news team tried to contact the owners Thomas and Kami Brundage, but only received an automated email reply that the business was no longer running. Francis tried to get his money back from the Brundage’s but they were not at all receptive.

Travelzoo Vice President and General Manager Michael Stitt issued this statement on Monday concerning the issue: “We are offering our subscribers a credit or refund, and intend to take all legal action possible against SoCal Hot Air Balloon Tours in order to recover our losses.”

Groupon also plans to refund its customers for the unusable deals; but it doesn’t end there.

Enter Denni Barrett of Magical Adventure Balloon Rides, a company the offers similar services in Southern California. He claims that the Brundage’s are intentionally defrauding customers, and this has been going on for quite some time.

Denni wrote Daily Deal Media with the following message regarding the issue and how it reflects on other companies in the industry.

I have been trying to expose this issue unsuccessfully for over a year. Travelzoo executives even flew from Chicago to Temecula and met with the Temecula Chamber of Commerce to hear our concerns. Travelzoo moved forward with their promotion anyways.

This story is about a bad apple in our industry defrauding the consumer and how their behavior was greatly magnified through daily deal sites like GroupOn and others.

Below is an email I sent to the Riverside District Attorney’s office. I want to promote and protect our sport and I think it important to see justice done here. I think the entities involved will be more likely to act if they knew the matter will become public.

Here, I’m posting the letter that Denni sent to the Riverside District Attorney’s office. It highlights the inconsistencies in the company’s ability to service as many customers as vouchers sold, the company’s 1-star ratings on Yelp and Trip Advisor, and the suspicious change in the “fine print” when the vouchers were being sold on Spreebird.  (Warning, this is long, but informative). Also highlighted is the massive amount of money that SoCal could have brought in from the daily deal companies, after being paid out, but not having to redeem the vouchers.

Ms. Filley,
A little over a year ago, I had my attorney contact you with my concerns over a consumer fraud or theft case. I understand your office did not take action. If you don’t remember, it starts with Thomas and Cami Brundage of SoCal Balloon Tours. Thomas and Cami have a repeated history of selling gift certificates and then closing up shop and never redeeming them. It was a successful scam, but limited in the numbers they could sell. It happened once before here in California and then in Colorado prior to their return to Temecula. The Brundages also had a habit of moving into someone’s rental and then not paying – waiting for them to be evicted. They even bought equipment with bounced checks forcing police intervention and an arrest before the equipment was paid for. Their company operated with unregistered and non-airworthy equipment, without aviation liability insurance, commercial auto insurance and workman’s compensation insurance, all requirements here in California. Because we operate early in the morning and primarily on weekends, enforcement was nil. They got by by not paying the dues the rest of us must pay.

Now add in the Daily Deal sites and we have a scam of epic proportion. The Daily Deal sites collect the money and pay the vendor upfront, issuing vouchers that can be redeemed later with the merchant.  By last winter a year ago, the Brundages had sold in excess of 12,000 estimated daily deal tickets through companies like Groupon. They sold the tickets at a price point that was below their cost. They sold quantities that they could not fulfill. Even larger competitors like ourselves would not be able to fly that many rides before the vouchers expired.

Through an attorney and at my cost, I brought the issue to the attention of several agencies including the Temecula Valley Chamber of Commerce, the Riverside District Attorney’s office, the California Department of Labor, the California Public Utilities Commission and the Federal Aviation Administration. All failed to act. My peers, specifically California Dreamin, A Grape Escape and I could clearly see a ponzi scam occurring in our industry and I felt like Harry Markopolos trying to expose Bernie Madoff. The Brundage’s continued to promote additional daily deals throughout 2011, despite 1 star reviews on Yelp and Trip Advisor – a testament to the greed and lack of quality control of the Daily Deal Merchants.  The most recent daily deal (one of many) can be found here:

http://www.spreebird.com/deal/temecula-wine-country-tour-hot-air-balloon-socal-hot-air-balloon-tours

(please note that after I brought the fraud charge up to spreebird, they changed their details of the postmortem ad this week, replacing the bullet “cannot redeem before February 1, 2012″ with “Makes a great gift for the holidays!”)

Looking at the “Fine Print” screen, they changed the cannot redeem until February 1st to “season begins February 1″ – (SoCal Balloon Tours operates year round in Temecula). Now if you go to the SoCal Balloon Tours website, www.socalballoons.com, you will find they went out of business effective 2/1/2012. Prior to which, they layed off their staff in November and started selling their balloon equipment assets purchased with their ill-gotten gains to local competitors. That’s right, they stopped flying and yet they continued to run new daily deals that could not be redeemed until after they went out of business.

The Brundages actions clearly show criminal intent. The same day they closed their business, the Brundages moved out of their Temecula rental property with no forwarding address. One of the assets they purchased last year was a very nice motor home. Perhaps the Brundages are on a road trip.

I estimate the Brundage’s have sold close to 15,000 prepaid vouchers, netting approximately $65 per voucher – close to $1 million dollars, if not more. That is by far a chilling theft from consumers.

Flying in Temecula every day, it was obvious that SoCal Hot Air Balloon Tours was not making a good faith effort to fly their passengers. It is simple math. Contact the daily deal purchasers from the different merchants and you will find the ocean of worthless paper vouchers – or just read the reviews from TravelZoo and the Better Business Bureau complaints. Trip Advisor reviews were so bad, SoCal Balloon Tours was removed from their site as a reviewable business.

There is precedent for this bad behavior. Hot air balloon pilot Kevin DeVoe of Balloons over Bloomington was charged with theft for cheating 24 customers. I think the Brundages make Kevin DeVoe look like an amateur. See the link below for details.

http://www.idsnews.com/news/story.aspx?id=56213&search=Bloomington&section=search

I would like to see an investigation and immediate prosecution against Thomas and Cami Brundage for theft. I would also like to see immediate confiscation of the Brundage assets (vans, trailers, balloons, fans) – including those sold in the last 60 days – so those assets can be used to pay back the consumer. Perhaps the DA may force an involuntary bankruptcy and assign a trustee to fairly repay all creditors.

The Brundage’s actions hurt the investments I’ve made in my business and the reputation of our entire industry. I struck out trying to bring this to light before, but maybe this new information and your efforts will bring some justice for those cheated.

I’d be happy to send you what my attorney sent last year when we saw the writing on the wall if it helps you investigate this complaint.

Very truly yours,

Denni Barrett
Magical Adventure Balloon Rides

Daily Deal Media plans on staying in touch with Denni in order to bring you any news related to this topic. I’ve also contacted Channel 7 Eyewitness News in Temecula, saying that we’d like to be kept in the loop as to any further developments.